Financial Professionals


U.S. ISM Back Above 50


Last week we offered a blog highlighting the positive turn for the Richmond Fed Manufacturing Index. Consistent with that improvement, this morning’s monthly U.S. Institute for Supply Management Manufacturing Index rose back above 50.0 to a surprising 51.5. The composition of the index was strong throughout, however, most impressive was the positive turn in the New Orders to Inventories Index (-5.9 last month to +1.8 this month).
Let’s take a closer look…
•  U.S. ISM Manufacturing (Figure 1.1) rose to 51.5 from 49.6 last month, exceeding estimates for 49.7
   o  New Orders rose to 52.3 from 47.1 last month
   o  Inventories fell to 50.5 from 53.0 last month
   o  The very important ratio between New Orders and Inventories now stands positive again at +1.8 (Figure 1.2)
   o  Production rose to 49.5 from 47.2 last month
   o  Employment rose to 54.7 from 51.6 last month
   o  Order Backlog rose to 44.0 from 42.5 last month
   o  Prices-Paid rose to 58.0 from 54.0 last month
Next up this week for major U.S. economic news is Friday’s Nonfarm Payrolls report. Consensus estimates for that report follow. I would be surprised if more positive than expected numbers weren’t delivered, but thankfully I am not an economist!
•  Nonfarm Payrolls consensus estimates change: +110,000 to +130,000
•  Private Payrolls consensus estimates change:  +125,000 to +150,000
•  September Unemployment Rate consensus estimates change:  8.2%, up from 8.1% last month
Figure 1.1 U.S. ISM Manufacturing, October 2011 to October 2012

Source: Bloomberg
Figure 1.2 U.S. ISM Manufacturing New Orders to Inventories Ratio TURNS Back Positive, October 2007 to October 2012

Source: Bloomberg

Past performance is not a guarantee of future results.

Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.